Interpretation
(1) In this Part, unless the context otherwise requires—
“domestic takaful business” means takaful business where the subject matter of the policy is—
(a) property which at the time of the making of the policy is situated in Malaysia or is in transit to or from Malaysia;
(b) a ship or an aircraft registered in Malaysia and all liabilities arising from the operation of such ship or aircraft;
(c) the life of any contingency related to any person who, at the time of the making of the policy, is a resident; or
(d) a risk of any nature in respect of any person who, at the time of the making of the policy, is a resident.
“family takaful” means takaful for the benefit of the individual and his family;
“family takaful business” means takaful business relating to family takaful;
“general takaful business” means takaful business which is not a family takaful business but includes takaful business relating to mutual financial aid and assistance to participants for losses arising from perils such as accidents, fires, floods and burglaries;
“Labuan captive takaful business” means Labuan takaful business where the participant in such takaful business is a related corporation or associate corporation of the Labuan takaful operator or where the participant in such takaful business is any other person in respect of whom the Labuan takaful operator is authorized by the Authority to provide takaful or retakaful;
“Labuan retakaful business” means a business in compliance with Shariah principles whereby the Labuan retakaful operator assumes a part of the liability under an original contract of takaful of another takaful operator or retakaful operator;
“Labuan retakaful operator” means a Labuan takaful operator carrying on Labuan retakaful business;
“Labuan takaful broker” means a person who is licenced to—
(a) arrange for Labuan takaful business on behalf of prospective or existing policy owners;
(b) arrange for Labuan retakaful business on behalf of any takaful operator seeking retakaful; or
(c) analyze the financial circumstances of another person and provides a plan to meet that other person’s financial needs and objectives, whether or not a fee is charged in relation thereto.
“Labuan takaful business” means takaful business which is not domestic takaful business and which is transacted in foreign currency, and includes Labuan captive takaful business, Labuan retakaful business and such other takaful business as may be approved by the Authority;
“Labuan takaful manager” means a person who is licensed to provide for management or administration services related to Labuan takaful business but does not include a Labuan takaful underwriting manager;
“Labuan takaful operator” means a person who is licensed to carry on Labuan takaful business;
“Labuan takaful underwriting manager” means a person, not being a bona fide employee, who is licensed to provide underwriting
services, including the administration of the business, to one or more Labuan takaful operators; “Malaysian takaful operator” means a takaful operator which is licensed under the Takaful Act 1984 [Act 312]; “net contribution income” in relation to a financial year, means the contributions receivable under contracts of takaful or retakaful after deducting any contributions payable arranged in respect of such contracts of takaful or retakaful; “policy” means a takaful certificate and any reference to a policy of a Labuan takaful operator and includes a reference to any policy in respect of which the Labuan takaful operator is under any liability, whether the policy was issued by the Labuan takaful operator or the liability was transferred to the Labuan takaful operator from another takaful operator; “policy owner” means any person who effects a policy; “takaful” means a scheme in compliance with Shariah principles based on brotherhood, solidarity and mutual assistance which provides for mutual financial aid and assistance to the participants in case of need whereby the participants mutually agree to contribute for that purpose; “takaful business” means the business of takaful whose aims and operations are in compliance with Shariah principles; “takaful certificate” includes any written contract of takaful whether or not embodied in or evidenced by an instrument in the form of a takaful certificate; “takaful licence” means a licence granted under this Part; “takaful licensee” means any person licensed under this Part; “takaful operator” means a person who carries on takaful business;
“working funds” means—
(a) in relation to a Labuan company, the paid-up capital unimpaired by losses; or
(b) in relation to a foreign Labuan company or a branch of a Malaysian takaful operator, the surplus of assets over liabilities to be maintained in the books of its office in Labuan.
(2) Where fifteen per centum or more of the voting shares of a corporation are held by another corporation, the first mentioned corporation shall be deemed to be an associate corporation of the other corporation, and any reference to an “associate corporation” shall be construed as a reference to that first mentioned corporation or that other corporation, as the case may be.
Licensing of Labuan takaful business and Labuan takaful related activities
(1) No person shall carry on or transact or hold himself out as carrying on or transacting any Labuan takaful business unless that person is—
(a) a Labuan company;
(b) a foreign Labuan company; or
(c) a branch of a Malaysian takaful operator,
and holds a valid takaful licence.
(2) Notwithstanding subsection (1), a Labuan insurer as defined in the Labuan Financial Services and Securities Act 2010 may carry on or transact or hold himself out as carrying on or transacting any Labuan takaful business if the Labuan insurer has obtained the prior approval of the Authority.
(3) No person shall carry on or transact or hold himself out as carrying on or transacting any business as a Labuan takaful manager, Labuan takaful underwriting manager or Labuan takaful broker or any other Labuan takaful-related activities as may be specified by the Authority unless that person holds a valid takaful licence.
(4) Notwithstanding subsection (3), a Labuan insurance manager, Labuan underwriting manager or Labuan insurance broker as defined in the Labuan Financial Services and Securities Act 2010 may carry on or transact or hold himself out as carrying on or transacting any business as a Labuan takaful manager, Labuan takaful underwriting manager or Labuan takaful broker or any other
Labuan takaful-related activities if the Labuan takaful manager, Labuan takaful underwriting manager or Labuan takaful broker has obtained the prior approval of the Authority.
(5) Except with the prior written approval of the Authority, a person who is not a takaful licensee shall not assume or use the words “Labuan takaful operator”, “Labuan takaful manager”, “Labuan takaful underwriting manager”, “Labuan takaful broker” or any derivative of such words in any language capable of being construed as indicating the carrying on of Labuan takaful business or Labuan takaful-related activities by such person.
(6) This section shall not apply to bank licensees or Islamic bank licensees distributing the takaful products of a Labuan takaful operator who has obtained the prior approval from the Authority.
Application for takaful licence to carry on Labuan takaful business
(1) Subject to section 77, every applicant for a licence to carry on Labuan takaful business shall satisfy the Authority that—
(a) the applicant is or will be, a Labuan company or a foreign Labuan company or a branch of a Malaysian takaful operator;
(b) the working funds of the applicant—
(i) in a case where the applicant proposes to carry on either family takaful business or general takaful business, are at least seven million and five hundred thousand ringgit or its equivalent in any foreign currency or such other amount or denomination as may be specified by the Authority;
(ii) in a case where the applicant proposes to carry on solely Labuan retakaful business, are at least ten million ringgit or its equivalent in any foreign currency or such other amount or denomination as may be specified by the Authority; or
(iii) in a case where the applicant proposes to carry on solely Labuan captive takaful business, are at least three hundred thousand ringgit or its
equivalent in any foreign currency or such other amount or denomination as may be specified by the Authority;
(c) the sum of money specified in paragraph (b) is maintained in an account of the applicant with a bank in Labuan, as evidenced by a certificate of such bank, at the time when the application is made;
(d) the person in control, director and principal officer of the applicant are fit and proper persons to be associated with a Labuan takaful operator;
(e) the applicant either—
(i) has established, or will establish, its management in Labuan with adequate knowledge and expertise of the Labuan takaful business to be carried on; or
(ii) has appointed, or will appoint, a licensed Labuan takaful underwriting manager or Labuan takaful manager in Labuan with adequate knowledge and experience of the Labuan takaful business to be carried on; and for the purpose of paragraph (ii), save that with respect to applicants who apply to carry out Labuan captive takaful business, such applicant shall appoint only a Labuan takaful underwriting manager; and
(f) the applicant will become a member of an association as prescribed by the Authority.
(2) Notwithstanding paragraph (1)(b), the Authority may, having regard to the extent and volume of Labuan takaful business which the applicant proposes to carry on, specify a lesser amount of working funds, subject to the applicant providing adequate guarantee on such terms and conditions as may be acceptable to the Authority for the difference in amount.
(3) Every application for a license to carry on Labuan takaful business shall—
(a) be made in writing and be submitted to the Authority;
(b) state whether such Labuan takaful business is in relation to family takaful business or general takaful business;
(c) set out the types of Labuan takaful business, as the case may be, which are to be carried on under the takaful licence;
(d) set out the applicant’s business plans; and
(e) be accompanied by—
(i) a copy of—
(aa) the applicant’s constituent documents, duly authenticated by a director or officer of the applicant;
(bb) the resolutions of the board and the general meeting, if any, of the applicant, duly authenticated by a director or officer of the applicant, authorising the applicant to apply for a takaful licence;
(cc) the applicant’s certificate of incorporation or registration, as the case may be, certified by the relevant registering authority in the place of establishment or origin of the applicant; and
(dd) except in relation to an application to carry on a Labuan captive takaful business, a letter of awareness from the applicant’s home supervisory authority or such authority as may be specified by the Authority.
(ii) a copy of the applicant’s audited annual accounts for the three consecutive years immediately preceding the application, where applicable;
(iii) a statement on—
(aa) the name, place and date of establishment of the applicant;
(bb) the names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant; and
(cc) the name and address of each member who holds fifteen per centum or more of the voting shares of the applicant;
(iv) a declaration by the applicant on the probity of the applicant’s directors and officers who would be concerned in the management of the proposed Labuan takaful operator; and
(v) in the case of an application by a Labuan company, a guarantee secured and an undertaking given, and, in the case of an application by a foreign Labuan company or a branch of a Malaysian takaful operator, an undertaking given, by the applicant in respect of its Labuan takaful business, in such manner and such form as may be acceptable to the Authority, and such guarantee and undertaking shall provide, inter alia, that—
(aa) the applicant shall comply with the financial obligations and requirements imposed under this Act and shall meet the applicant’s liabilities in respect of its Labuan takaful business;
(bb) where the applicant is a Labuan company, no participant of the applicant who holds ten per centum or more of the paid-up capital of the applicant shall be changed without the prior written approval of the Authority and, where the applicant is a foreign Labuan company, that it shall promptly notify the Authority of any change in its participants who hold ten per centum or more of its paid-up capital; and
(cc) every director or the principal officer of the applicant responsible for the management of its Labuan takaful business shall be a fit and proper person and the appointment of such director or principal officer shall only be made after consultation with the Authority.
(4) Subparagraph (3)(e)(v) shall not apply to an application to carry on a Labuan captive takaful business where the policy owner is a related corporation or associate corporation of the Labuan takaful operator.
(5) The Authority may require from the applicant such other information or documents as may be specified by the Authority for the purpose of determining the application.
(6) The information or documents specified by the Authority under subsection (5) may differ as between applicants, or different classes, categories or descriptions of applicants as may be determined by the Authority.
(7) An application under this section may be made in relation to a person not yet established under the Labuan Companies Act 1990 but will be so established in the event of such person obtaining a takaful licence, and in such event, the requirements of subsection (1) may be varied by the Authority as it deems appropriate.
Application for takaful licence to carry on Labuan takaful related activities
(1) Every applicant for a takaful licence to carry on business as a Labuan takaful manager, Labuan takaful underwriting manager or Labuan takaful broker shall satisfy the Authority that—
(a) the person in control, director and principal officer of the applicant are fit and proper persons;
(b) the applicant is able to maintain sufficient funds in its business to cover its expenses of operations and management in Labuan for at least six months;
(c) in respect of an applicant for a takaful licence to carry on the business of Labuan takaful manager or Labuan underwriting manager—
(i) the applicant has established, or will establish, its management in Labuan with adequate knowledge and expertise of the Labuan takaful business to be carried on; or
(ii) the applicant has appointed, or will appoint, a licensed Labuan takaful manager or Labuan takaful underwriting manager in Labuan with adequate knowledge and experience of the Labuan takaful business to be carried on to act as its management in Labuan;
(d) in respect of an applicant for a takaful licence to carry on business as a Labuan takaful broker—
(i) the applicant has established, or will establish, its management in Labuan with adequate knowledge and expertise of the Labuan takaful business to be carried on; or
(ii) the applicant has appointed, or will appoint, a licensed Labuan takaful manager in Labuan with adequate knowledge and experience of the Labuan takaful business to be carried on to act as its management in Labuan;
(e) the applicant either has obtained or will obtain any professional indemnity insurance or professional indemnity takaful policy of not less than two million and five hundred thousand ringgit or its equivalent in any foreign currency or such other amount as may be specified by the Authority, and remain indemnified under such policy throughout its operation in Labuan;
(f) the applicant holds such qualification as may be specified by the Authority; and
(g) the applicant will become a member of an association as prescribed by the Authority.
(2) Every application for a license to carry on business as a Labuan takaful manager, a Labuan takaful underwriting manager or a Labuan takaful broker shall—
(a) be made in writing and be submitted to the Authority;
(b) state the nature of the business to be carried on under the takaful licence; and
(c) be accompanied by—
(i) a copy of—
(aa) the applicant’s constituent documents, duly authenticated by a director or officer of the applicant;
(bb) the resolutions of the board and the general meeting, if any, of the applicant, duly authenticated by a director or officer of
the applicant, authorizing the applicant to apply for a takaful licence;
(cc) the applicant’s certificate of incorporation or registration, as the case may be, certified by the relevant registering authority in the place of establishment or origin of the applicant; and
(dd) a letter of awareness from the applicant’s home supervisory authority or such authority as may be specified by the Authority;
(ii) a copy of the applicant’s audited annual accounts for the three consecutive years immediately preceding the application, where applicable;
(iii) a statement on—
(aa) the name, place and date of establishment of the applicant;
(bb) the names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant; and
(cc) the name and address of each member who holds fifteen per centum or more of the voting shares of the applicant;
(iv) a declaration by the applicant on the probity of the applicant’s directors and officers who would be concerned in the management of the proposed Labuan takaful manager, a Labuan takaful underwriting manager or a Labuan takaful broker, as the case may be; and
(v) in the case of an application by a Labuan company, a guarantee secured and an undertaking given, and, in the case of an application by a foreign Labuan company or a branch of a Malaysian takaful operator, an undertaking given, by the
applicant in respect of the business of a Labuan takaful manager, a Labuan takaful underwriting manager or a Labuan takaful broker, as the case may be, in such manner and such form as may be acceptable to the Authority, and such guarantee and undertaking shall provide, inter alia, that—
(aa) the applicant shall comply with the financial obligations and requirements imposed under this Act and shall meet the applicant’s liabilities in respect of the business of a Labuan takaful manager, a Labuan takaful underwriting manager or a Labuan takaful broker, as the case may be;
(bb) where the applicant is a Labuan company, no participant of the applicant who holds ten per centum or more of the paid-up capital of the applicant shall be changed without the prior written approval of the Authority and, where the applicant is a foreign Labuan company, that it shall promptly notify the Authority of any change in its participants who hold ten per centum or more of its paid-up capital; and
(cc) every director or the principal officer of the applicant responsible for the management of the business of a Labuan takaful manager, a Labuan takaful underwriting manager or a Labuan takaful broker, as the case may be, shall be a fit and proper person and the appointment of such director or principal officer shall only be made after consultation with the Authority.
(3) The Authority may require from the applicant such other information or documents as may be specified by the Authority for the purpose of determining the application.
(4) The matters specified under subsection (2) may differ as between applicants, or different classes, categories or descriptions of applicants.
Grant of takaful licence
(1) Upon receiving an application for a takaful licence, the Authority may approve the application, with or without conditions, or reject the application.
(2) Where the Authority rejects the application, the Authority shall notify the applicant in writing of the rejection.
(3) Where the Authority approves the takaful licence under subsection (1), the Authority shall issue the takaful licence to the applicant.
(4) The Authority may specify in the takaful licence the type of activities the takaful licensee may carry on.
(5) An applicant who is aggrieved by the decision of the Authority under subsection (1) when his application is rejected, may within thirty days of the decision being notified to him, appeal to the Minister in writing.
(6) A takaful licensee shall comply with any conditions imposed under a license granted pursuant to subsection (1) for the duration of the license.
(7) A licence granted under this section shall remain in force until it is surrendered or revoked in accordance with the provisions of this Act.
(8) The Authority may, upon consultation with the Minister, by written notice to the takaful licensee vary the existing terms and conditions or impose such additional terms and conditions, in respect of a takaful licence, from time to time as it deems fit.
Publication of list of all Labuan takaful licensees
(1) The Authority shall publish annually not later than 31 March of each year a list of all existing takaful licensees as at 31 December of the preceding year and their licence numbers in the Gazette, and if any licence is issued, revoked or surrendered, subsequent to such publication, the Authority shall cause to be published in the Gazette as soon as practicable a revised list of all existing takaful licensees and their licence numbers.
(2) The list referred to in subsection (1) shall be contained in the same Gazette published by the Authority under Section 106 of the Labuan Financial Services and Securities Act 2010.
Continuing licensing requirements
(1) Every Labuan takaful operator which is a Labuan company shall, prior to the making of any amendment or alteration to any of its constituent documents, or prior to any change of its person in control, director or principal officer, furnish to the Authority particulars in writing of any such proposed amendment, alteration or change, for the approval of the Authority.
(2) Every Labuan takaful operator which is a foreign Labuan company shall, prior to the making of any change of its principal officer, furnish to the Authority the particulars in writing of any proposed change for the approval of the Authority.
(3) Every Labuan takaful operator which is a foreign Labuan company or a branch of a Malaysian takaful operator shall notify in writing within three months after the making of any amendment or alteration to any of its constituent documents, or any change of its person in control or director, furnish to the Authority particulars in writing of such amendment, alteration or change duly authenticated in a manner acceptable to the Authority by its director.
(4) Every takaful licensee shall immediately notify the Authority of any amendment or alteration to any information which had been furnished to the Authority in connection with the application for the takaful licence.
(5) No Labuan takaful operator shall make any amendment or alteration to its constituent documents which are contrary to any written law.
(6) Where the Labuan takaful operator is a Labuan company, no participant of the Labuan takaful operator who holds fifteen per centum or more of the paid-up capital of the applicant shall be changed without the prior written approval of the Authority and, where the Labuan takaful operator is a foreign Labuan
company, it shall promptly notify the Authority of any change in its participants who hold fifteen per centum or more of its paid-up capital.
Chapter 3 — Financial requirements and duties of and restrictions on takaful licencees
Appointment of actuary
Every Labuan takaful operator carrying on family takaful business shall appoint an actuary annually within such period as may be specified by the Authority.
Margin of solvency
Every Labuan takaful operator, including a takaful licensee which carries on Labuan captive takaful business, shall ensure that the realizable value of its assets exceeds the amount of its liabilities by a margin in such an amount or calculated in such manner as may be specified in writing by the Authority from time to time.
Segregation of takaful fund
(1) The assets of any fund established for any family takaful business and any general takaful business under this Act shall be kept separate from all other assets of the Labuan takaful operator, and shall not include any amounts on account of goodwill, the benefit of development expenditure or similar items not realizable apart from the business or part of the business of such Labuan takaful operator.
(2) For the purposes of this section, the assets from time to time representing any Labuan retakaful operator’s deposit held by the Labuan takaful operator to meet liabilities of any fund established for any family takaful business or any general takaful business shall be treated with the agreement of the Labuan retakaful operator as assets of the fund.
Separate accounts to be kept by Labuan takaful operator
(1) Every Labuan takaful operator shall keep the accounts in respect of its Labuan takaful business separate from its other accounts.
(2) Every Labuan takaful operator which carries on both family takaful business and general takaful business shall keep the accounts in respect of its family takaful business separate from the accounts in respect of its general takaful business.
(3) Every Labuan takaful operator which is a branch of a Malaysian takaful operator shall keep the accounts in respect of its Labuan takaful business separate from the accounts in respect of its domestic takaful business carried on in Labuan.
Submission of financial statements
Every takaful licensee under this Part shall comply with the requirements with respect to the submission of financial statements as set out in the Third Schedule.
Subsidiaries and offices of takaful licensees
A takaful licensee under this Part may, subject to the prior written consent of the Authority or as may be permitted by the Authority from time to time, open any office other than its principal place of business in Labuan, or acquire or establish any subsidiary.
Restriction on business of takaful licensees by Labuan takaful operator
(1) No Labuan takaful operator shall carry on any business activities in Labuan or elsewhere from its office in Labuan other than its Labuan takaful business or business activities in connection with or for the purpose of such Labuan takaful business.
(2) Notwithstanding the definition of “Labuan takaful business” and subsection (1), a Labuan takaful operator may carry on the retakaful of domestic takaful business, including the retakaful of domestic takaful business transacted in ringgit and such other business as may be specified in writing by the Authority.
(3) No Labuan takaful operator shall act on behalf of another Labuan takaful operator as a Labuan takaful manager or Labuan takaful underwriting manager unless such first-mentioned Labuan takaful operator has been granted a takaful licence to carry on business as a Labuan takaful manager or Labuan takaful underwriting manager, as the case may be.
Restrictions on and duties of Labuan takaful manager, Labuan takaful underwriting manager and Labuan takaful broker
(1) No Labuan takaful manager shall provide any services other than administrative services and no Labuan takaful underwriting manager shall provide any services other than underwriting services.
(2) No Labuan takaful underwriting manager shall provide underwriting services to any person not licensed under this Act or to any business carried on by a takaful operator registered under the Takaful Act 1984.
(3) No Labuan takaful broker shall act as a broker in respect of domestic takaful business, but a licensed Labuan takaful broker may handle the retakaful of domestic takaful business, including the retakaful of domestic takaful business transacted in ringgit.
(4) Every Labuan takaful manager or Labuan takaful underwriting manager who acts on behalf of a Labuan takaful operator shall maintain its own funds separate from the funds of the Labuan takaful operator and shall not apply the funds of such Labuan takaful operator to meet any of its expenses or liabilities other than in respect of the Labuan takaful business.
List of Labuan takaful operators to be supplied by Labuan takaful manager and Labuan takaful underwriting manager
Every Labuan takaful manager and Labuan takaful underwriting manager shall, within thirty days from the close of its financial year, submit to the Authority, in such form and manner as may be specified by the Authority, a list of all Labuan takaful operators for whom such Labuan takaful manager provides administrative services or Labuan takaful underwriting manager provides underwriting services.
Conduct of business
(1) Every Labuan takaful operator shall—
(a) conduct its takaful business with due diligence and care in accordance with Shariah principles;
(b) follow accepted international accounting standards or such other standards as may be approved by the Authority;
(c) register all assets in its name, or in the name of a custodian or nominee for such Labuan takaful operator where assets are acquired in the name of such custodian or nominee, and in the case of bearer shares, hold them in safe custody; and
(d) indicate clearly on its letterhead, stationery and other documents containing its name that it is licensed under this Act, together with the number of its takaful licence.
(2) No Labuan takaful operator shall advertise or publish, in any form, information which is untrue or which is likely to mislead another person in relation to the written laws applicable to Labuan takaful operators and their related business and activities or that Labuan takaful operator’s financial status or takaful or retakaful plans or any other matter in respect of its Labuan takaful business.
(3) Paragraphs 1(a) and (d) and subsection (2) shall apply with the necessary modifications to a Labuan takaful manager, Labuan takaful underwriting manager and Labuan takaful broker.
Chapter 4 — Payment of policy monies under a family takaful policy and personal accident takaful policy
Application of this Chapter
In this Chapter, a reference to a policy is a reference to a family takaful policy in respect of the life of the policy holder including a life policy under section 23 of the Civil Law Act 1956 [Act 67], and a family takaful policy in respect of personal accident effected by a policy owner upon his own family providing for payment of policy moneys on his death.
Power to make nomination
(1) A policy owner who has attained the age of eighteen years may nominate a natural person to receive policy monies payable upon his death under the policy by notifying the Labuan takaful operator in writing of the name, date of birth, identity card number or birth certificate number and address of the nominee at the time the policy is issued.
(2) Where a nomination is made after the policy is issued, the policy owner shall submit the policy together with the particulars of the nominee mentioned in subsection (1) for the Labuan takaful operator’s endorsement of the nomination on the policy.
(3) A nomination made under subsection (1) shall be witnessed by a person of sound mind who has attained the age of eighteen years and who is not a nominee named under that subsection.
(4) The Labuan takaful operator—
(a) shall prominently display in the nomination form a notice that the policy owner has to assign the policy benefits to his nominee if his intention is for his nominee, other than his spouse, child or parent, to receive the policy benefits beneficially and not as an executor;
(b) shall record the nomination and the particulars of the nominee in its register of policies; and
(c) shall register in its register of policies the nomination made under subsection (1) and such nomination shall take effect from the date the nomination is registered.
(5) A failure to comply with subsection (4) shall affect the validity of the nomination unless otherwise proven that the necessary notification of the nomination was made by the policy owner and given to the Labuan takaful operator for endorsement on the policy.
(6) A nomination made under subsection (1) may be in favour of one person or several persons and where there is more than one person nominated, the policy owner may direct that specified shares be paid to the persons nominated and in the absence of direction by the policy owner, the Labuan takaful operator shall pay such persons in equal shares.
Revocation of nomination
(1) A nomination, including a nomination to which section 97 applies, shall be revoked—
(a) upon the death of the nominee, or where there is more than one nominee, upon the death of all the nominees, during the lifetime of the policy owner;
(b) by a notice in writing given by the policy owner; or
(c) by any subsequent nomination.
(2) Subject to subsection (1), a nomination shall not be revoked by a will or by any other act, event or means.
(3) Where there is more than one nominee and one of the nominees predeceases the policy owner, in the absence of any subsequent nomination by the policy owner disposing of the share of the deceased nominee, the Labuan takaful operator shall pay the share of the deceased nominee to the remaining nominees in proportion to their respective shares.
Payment of policy monies
(1) Subject to subsection (2), where a policy owner dies having made a nomination, the Labuan takaful operator shall pay the policy monies of the deceased policy owner according to the direction of the nomination upon receipt of a claim by the nominee and the claim is accompanied by proof of death of the policy owner.
(2) Where a nominee fails to claim the policy monies within two months of the Labuan takaful operator becoming aware of the death of the policy owner, the Labuan takaful operator shall notify the nominee in writing at his last known address of his entitlement to claim the policy monies.
(3) Where a nominee fails to claim the policy monies within twelve months of the notification under subsection (2), section 100 shall apply as though no nomination was made.
(4) Where a nominee, other than a nominee under section 97, dies after the death of the policy owner but before any policy monies has been paid to him as nominee, this section 95 or section 100 shall apply to the policy, as the case may be.
Trustee of policy monies
(1) A nomination by a policy owner, other than a Muslim policy owner, shall create a trust in favour of the nominee of the policy monies payable upon the death of the policy owner, if—
(a) the nominee is his spouse or child; or
(b) where there is no spouse or child living at the time of nomination, the nominee is his parent.
(2) A payment under subsection (1) shall not form part of the estate of the deceased policy owner or be subject to his debts.
(3) The policy owner, by the policy, or by a notice in writing to the Labuan takaful operator, may appoint trustees of the policy money and where there is no trustee—
(a) the nominee who is competent to contract; or
(b) where the nominee is incompetent to contract, the parent of the incompetent nominee and where there is no surviving parent, the Public Trustee,
shall be the trustee of the policy monies and the receipt of a trustee shall be a discharge to the Labuan takaful operator for all liability in respect of the policy monies paid to the trustee.
(4) A policy owner shall not deal with a policy to which subsection (1) applies by revoking a nomination under the policy, by varying or surrendering the policy, or by assigning or pledging the policy as security, without the written consent of the trustee.
(5) Nothing in this section shall prejudice a creditor of a policy owner from applying to the court for a declaration that this section, wholly or partly, is inapplicable to any particular policy on the ground that the premiums under that policy were paid to defraud the creditor.
Nominee other than a nominee under section 97
(1) A nominee, other than a nominee under section 97, shall receive the policy monies payable on the death of the policy owner as an executor and not solely as a beneficiary and any payment to the nominee shall form part of the estate of the deceased policy owner and be subject to his debts and the Labuan takaful operator shall be discharged from liability in respect of the policy monies paid.
(2) Subsection (1) applies to a nominee of a Muslim policy owner who, on receipt of the policy monies, shall distribute the policy monies in accordance with Shariah principles.
Assigned or pledged policy monies
(1) Notwithstanding a nomination under section 94 or the creation of a trust under subsection 97(1), where the policy monies, wholly or partly, have been pledged as security or assigned to a person, the claim of the person entitled under the security or the assignee shall have priority over the claim of the nominee and, subject to the rights under the security or the assignment being preserved, the Labuan takaful operator shall pay the balance of the policy monies to the nominee.
(2) Where more than one person is entitled under the security or the assignment, the respective rights of the persons entitled under the security or the assignment shall be in the order of priority according to the priority of the date on which the security or the assignment was created, both security and assignment being treated as one class for this purpose.
Payment of policy monies where there is no nomination
(1) Where a policy owner dies without having made a nomination, subject to section 99, the Labuan takaful operator shall pay the policy monies of the deceased policy owner to the applicant who produces the Grant of Probate, Letters of Administration or Distribution Order.
(2) Subject to subsection (1), the Labuan takaful operator may pay to the policy owner’s spouse, child or parent in that order of priority and where there is more than one spouse, child or
parent, in equal shares to each person of that class and where there is no spouse, child or parent and—
(a) where the policy monies do not exceed one hundred thousand ringgit or its equivalent in foreign currency or such greater amount or denomination as may be specified, the Labuan takaful operator may pay all that policy monies without requiring the Grant of Probate, Letters of Administration or Distribution Order—
(i) to a person who satisfies the Labuan takaful operator to be entitled and likely to be given the Grant of Probate, Letters of Administration or Distribution Order; or
(ii) to a person who satisfies the Labuan takaful operator to be beneficially entitled to the estate of the deceased policy owner; or
(b) where the policy monies are more than one hundred thousand ringgit or its equivalent in foreign currency, or such greater amount or denomination as may be specified, the Labuan takaful operator may pay to the person referred to in subparagraph (a)(i) or (ii) the amount referred to in that paragraph and subject to subsection (6), pay to that person the balance of the policy monies upon production of the Grant of Probate, Letters of Administration or Distribution Order.
(3) In this section, a reference to policy monies is a reference to the aggregate amount of policy monies in respect of all policies of the policy owner with that Labuan takaful operator where there is no nomination.
(4) The Grant of Probate, Letters of Administration or Distribution Order granted or having effect as if granted, in respect of the personal estate comprising the policy monies, by a court in Malaysia or a competent authority outside Malaysia, or its certified copy shall be sufficient proof to the Labuan takaful operator to pay the policy monies to the person to whom the grant was made.
(5) The Labuan takaful operator may accept the Grant of Probate, Letters of Administration or Distribution Order or any other document having the same effect, granted by a court in Malaysia or a competent authority outside Malaysia, as sufficient
proof to pay the policy monies of the deceased policy owner to the person to whom the grant was made, provided that such Grant of Probate, Letters of Administration or Distribution Order or other document having the same effect has been duly registered with the court in Malaysia and sealed in accordance with the Probate and Administration Act 1959 [Act 97].
(6) Where, upon the expiry of twelve months after a payment under paragraph (2)(b) has been made by a Labuan takaful operator, a balance of the policy monies still remains payable and no claim has been made by a person who holds a Grant of Probate, Letters of Administration or Distribution Order, the Labuan takaful operator shall pay the balance of the policy monies to the person who received the initial payment of the policy monies.
(7) Policy monies paid under this section shall be deemed to have been duly paid and the Labuan takaful operator shall be discharged from liability in respect of the policy monies so paid notwithstanding the absence or invalidity of, or any defect in, the Grant of Probate, Letters of Administration or Distribution Order or any other document having the same effect.
(8) A person to whom a payment may be made under this section shall give a receipt which shall be deemed to be a valid receipt.
Payment to person incompetent to contract
Where a person has not attained the age of eighteen years, or is certified by a medical practitioner in the public service to be of unsound mind and no committee of his estate has been appointed, or to be incapable, by reason of infirmity of mind or body, of managing himself and his property and affairs, the Labuan takaful operator—
(a) in the case of a nominee under subsection 97(1)—
(i) if the policy monies are ten thousand ringgit or its equivalent in foreign currency or less or such other amount or denomination as may be specified, may pay to a person who satisfies the Labuan takaful operator that he will apply the policy monies for the maintenance and benefit of the nominee under subsection 97(1), or a person to whom policy monies
are payable under subsections 100(2) or (6), subject to the execution of an undertaking by that person that the policy monies will be applied solely for the maintenance and benefit of the nominee; and
(ii) if the policy monies are more than the amount in paragraph (a), shall pay to the Public Trustee or a trust company nominated by the Public Trustee; or
(b) in the case of a person to whom policy monies are payable under subsection 100(2) or (6), shall pay to the Public Trustee or a trust company nominated by the Public Trustee.
Distribution of policy monies in due course of administration
A person to whom policy monies may be paid under section 100 shall receive the policy monies as an executor and not solely as a beneficiary and shall distribute the policy monies in the due course of administration of the estate of the deceased person in accordance with the terms of a will of the deceased person, and if there is no such will, in accordance with the law applicable to the administration, distribution and disposition of his estate upon his intestacy.
This Chapter to prevail over policy and any other written law
(1) This Chapter shall have effect in relation to a policy which is in force on or after its operation, and in relation to a nomination made before, on or after its operation, notwithstanding anything contained in the policy, and nothing contained in a policy shall derogate from, or be construed as derogating in any manner or to any extent from, this Chapter.
(2) This Chapter shall have full force and effect notwithstanding anything inconsistent with or contrary to any other written law relating to probate, administration, distribution or disposition of the estates of deceased persons, or in any rule of law, practice or custom in relation to those matters.
Winding-up of Labuan takaful operator
(1) The Authority shall be a party to any petition for the winding-up of any Labuan takaful operator.
(2) The Authority may present a petition for the winding-up of a Labuan takaful operator or its Labuan takaful business on the grounds of its inability to meet any liabilities or when it suspends payment to its creditors.
(3) For the purposes of subsections (1) and (2), the court shall have regard to the interests of the policy owners, other customers and creditors of the Labuan takaful operator.
(4) In any winding-up of a Labuan takaful operator, or when a Labuan takaful operator becomes insolvent, there shall be paid from the assets in the takaful fund or other funds of the Labuan takaful operator in priority to all other unsecured liabilities, the following liabilities in the following sequence:
(a) the costs and expenses of the winding-up, including the costs of the liquidator or the receiver;
(b) all wages or salary, whether or not earned wholly or in part by way of commission, including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating conditions of employment, of any employee not exceeding one thousand five hundred ringgit or its equivalent in foreign currency or such other amount or denomination as may be specified from time to time in respect of services rendered by him to the Labuan takaful operator within a period of four months before the commencement of the winding-up;
(c) all amounts due in respect of workers’ compensation, under any written law relating to workers’ compensation, which accrued before the commencement of the winding-up;
(d) all remuneration payable to any employee in respect of vacation leave, or in the case of his death to any other
person in his right, which accrued in respect of any period before the commencement of the winding-up;
(e) all amounts due in respect of contributions payable during the twelve months next before the commencement of the winding-up by the Labuan takaful operator as the employer of any person under any written law relating to employees’ superannuation or provident funds or under any scheme of superannuation or retirement benefit which is an approved scheme under any federal law relating to income tax;
(f) the amount of all federal tax assessed under any written law before the date of the commencement of the winding-up or assessed at any time before the time fixed for the proving of liability has expired;
(g) all the liabilities and expenses attributable to its Labuan takaful business of the class for which the particular takaful fund is created; and
(h) the amounts required to make good any deficit in the other takaful funds after the liabilities and expenses attributable to the Labuan takaful business of the class to which the particular takaful fund referred to in paragraph
(g) is applicable have been fully met.
(5) The liabilities in each class specified in subsection (4) shall rank in the order specified but liabilities of the same class shall rank equally between themselves, and shall be paid in full, unless the assets in the takaful fund of the Labuan takaful operator are insufficient to meet them, in which case they shall abate in equal proportions between themselves.
(6) For the avoidance of doubt, the provisions relating to the winding-up as applied to a Labuan takaful operator shall not apply to any takaful fund which are segregated pursuant to section 85 and which shall not form part of the assets of the Labuan takaful operator.
(7) The provisions of this section shall have effect notwithstanding anything inconsistent therewith or contrary thereto in any other written law.
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
